Posts Tagged ‘Lagarde’

A signboard at a store in Guangzhou, China, lists various forms of mobile payment (photo: Imagine China/Newscom)

When you send an email, it takes one click of the mouse to deliver a message next door or across the planet. Gone are the days of special airmail stationery and colorful stamps to send letters abroad.

International payments are different. Destination still matters. You might use cash to pay for a cup of tea at a local shop, but not to order tea leaves from distant Sri Lanka. Depending on the carrier, the tea leaves might arrive before the seller can access the payment.

All of this may soon change. In a few years, cross-border payments and transactions could become as simple as sending an email.

Financial technology, or Fintech, is already touching consumers and businesses everywhere,from a local merchant seeking a loan, to the family planning for retirement, to the foreign worker sending remittances home. Den Rest des Beitrags lesen »

Baden-Baden, the German spa town built on ancient thermal springs, is a fitting venue to discuss the health of the global economy during this week’s meeting of the Group of Twenty finance ministers and central bank governors.

Policymakers will likely share a sense of growing optimism, because the recent strengthening of activity suggests that the world economy may finally snap out of its multi-year convalescence.

Economic prescriptions have played an important part in the recovery, and will continue to do so for some time. Maintaining the positive growth momentum continues to require supportive macroeconomic policies. And the participants at the meetings will need to take action, individually and collectively, to make growth more inclusive and resilient.

Have we reached a turning point?The short answer is yes—at least for now. Growth outturns in the second half of last year were generally solid. Manufacturing and confidence indicators are picking up, and there are signs that global trade volumes are rising along with them. Den Rest des Beitrags lesen »

Defenders of globalization are on solid ground when they criticize President Trump’s threats of punitive tariffs and border walls. The economy can’t flourish without trade and immigrants.

But many of those defenders have their own dubious explanation for the economic disruption that helped to fuel the rise of Mr. Trump.

At a recent global forum in Dubai, Christine Lagarde, head of the International Monetary Fund, said some of the economic pain ascribed to globalization was instead due to the rise of robots taking jobs. In his farewell address in January, President Barack Obama warned that “the next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good middle-class jobs obsolete.”

Blaming robots, though, while not as dangerous as protectionism and xenophobia, is also a distraction from real problems and real solutions. Den Rest des Beitrags lesen »

Christine Lagarde

Christine Lagarde is Managing Director of the International Monetary Fund. She previously served as France’s finance minister from 2007-2011, and in 2009 was named by the Financial Times as the best finance minister in the eurozone.

JAN 11, 2017 Project Syndicate

WASHINGTON, DC – In 2016, the world’s attention was focused on major political developments in the European Union, the United States, and other countries, where voters have expressed deeply held concerns about trade, migration, and structural labor-market changes.

But, from an economic perspective, 2016 was a fairly quiet year: the global economy continued its slow recovery, with economic activity in the US, Europe, and emerging markets gradually improving, despite some remaining vulnerabilities. And even low-income economies that have struggled to adjust to falling commodity prices may receive a small boost, given recent price increases.

Remarkably, financial markets have so far taken the year’s political upheavals in stride. Indeed, the prospect of a more expansive fiscal stance in the US has raised expectations of global growth and inflation in the near future. This signals possible relief for advanced economies’ central banks, which have carried most of the economic-policy burden during the years of slow recovery since the 2008 global financial crisis. Den Rest des Beitrags lesen »

Low growth, high inequality, and slow progress on structural reformsare among the key issues that G20 leaders will discuss at their meeting in Hangzhou, China, this weekend. This meeting comes at an important moment for the global economy. The political pendulum threatens to swing against economic openness, and without forceful policy actions, the world could suffer from disappointing growth for a long time.

2016 will be the fifth consecutive year with global GDP growth below its long-term average of 3.7 percent (1990-2007), and 2017 may well be the sixth (Chart 1). Not since the early 1990s—when ripple effects from economic transition caused growth to slow—has the world economy been so weak for such a long time. What has happened?

In advanced economies, real growth is running almost a full percentage point below the average of 1990-2007.

Many are still plagued by crisis legacies, such as private and public sector debt overhangs, and impaired balance sheets of financial institutions. The result has been stubbornly weak demand.

The longer demand weakness lasts, the more it threatens to harm long-term growth as firms reduce production capacity and unemployed workers are leaving the labor force and critical skills are eroding. Weak demand also depresses trade, which adds to disappointing productivity growth.

On the supply side, slowing productivity and adverse demographic trends are weighing on potential growth—a trend that started before the global financial crisis. And with little expectation of stronger growth tomorrow, firms have even less incentive to invest, which hurts both productivity and short-term growth prospects.

Emerging economies have also been slowing—but from an exceptionally fast pace of growth in the past decade.Their slowdown is therefore more a return to the historical norm. Developments within emerging economies are quite diverse. In 2015, for example, GDP in two of the four largest economies—China and India—grew between 7-7½ percent, while GDP contracted by close to 4 percent in the other two—Russia and Brazil. But there are important common factors: Den Rest des Beitrags lesen »

The U.S. economy is in good shape, despite some setbacks in very recent months. The latest IMF review of the U.S. economy can be summed up in three numbers: above 2, below 5, and 4. What does that mean?

Growth is above 2 percent: we expect the economy to grow above 2 percent this year and next, more specifically 2.2 percent in 2016 and 2.5 percent in 2017.

Unemployment is well below 5 percent: in the past year an average of 200,000 new jobs were created every month, and household incomes are rising at a healthy clip.

Four “forces” pose a challenge to future growth: beyond the important recent achievements, however, we need to look forward to what will be needed to ensure strong, sustained and balanced growth in the years ahead. Here, I would highlight in particular the four P’s.